Step by Step Guide to the Market Research Process

Summary: The market research process requires decisions related to budget, target sample, development of data collection tools, fielding, analysis, and reporting. Here is a check list to make the process easier.

11 minutes to read. By author Michaela Mora on June 27, 2021
Topics: Relevant Methods & Tips, Business Strategy, Market Research

Market Research Process

The market research process requires making decisions related to business problems and methodology in the context of limited resources, often short deadlines, and small budgets.

For those who are not familiar with market research and related research disciplines like UX research, the process can be overwhelming. This can lead to corner-cutting and mistakes that may result in useless data and wasted resources.

Overall, for any market research or UX research project, it helps to follow the following six steps to ensure data quality and actionable insights:

Step 1. Define the Problem

The first step in any market research problem is to define the problem from a business perspective. When defining the problem we need to consider:

  • The business decision(s) that the research will support.
  • The purpose of the study.
  • Relevant background information about the problem.
  • The information needed.

This is the most important step. It sets the direction of the whole market research process. Here are some tips to facilitate it:

  • Ask decision-makers how they will use the research results, what business decisions they will make based on the data. They should be specific.
  • Get a consensus among key stakeholders on the main business objective (s) the research will support. Get them involved from the start.
  • Avoid objective creep. Don’t try to research everything under the sky in a project. Trying to cram many things into a project because of budget constraints is often a waste of money as data quality suffers. Focus on what’s needed for decision-making. 
  • DO NOT select a data collection method or analytical approach before establishing clear objectives.
  • Discuss limitations early in the process. Set clear expectations of what the research will cover and what data it will provide.

Step 2. Develop an Approach to the Problem

The second step is to develop an approach based on the business problem, the information needed to solve it, and the decision (s) the business will make based on the research results.

In this step we:

  • Translate the business objectives into research questions.
  • Decide the analytical models needed to analyze the data and support the decisions.
  • Establish hypotheses that should be tested or explored.

Depending on the maturity of the market research /insights function and the existence of previous research, this step may require some pre-preliminary research that may include:

  • Secondary research (a.k.a desktop research) using prior internal research, data collected via internal systems  (sales, web analytics, support tickets, etc.), industry reports, publications, online content (video, articles, conference presentations, etc.).
  • Interview with key stakeholders and industry experts.
  • Qualitative research with customers and non-customers.

Step 3. Formulate a Research Design

A market research design is a blueprint for obtaining the information needed to solve the research problem at hand. Research designs can be exploratory (probing tentative understanding) or conclusive (testing hypotheses for decision making). 

Conclusive research designs can be descriptive (describing phenomena) or causal (inferring cause-effect relationships). Ideally, we should use hybrid research designs in which exploration and hypothesis testing are combined to provide solid support for decision making.

In this step, practical considerations related to timeline and budget often influence the final research design that we choose.

How Much Does it Cost?

Budget limitations are a sign of how valuable market research is to the company, so bring the budget discussion early in this phase. 

In the budget discussion, we should:

  • Determine how much the key stakeholders are willing to invest in the requested research. Get a number! If there is no commitment to a budget, you will be wasting your and your research vendor’s time (if you are outsourcing any parts of the project), since it rarely happens.
  • Make your stakeholders aware there is always a trade-off between research quality, speed, and cost. There is a limit to “better, faster, and cheaper” in market research. Push it too hard and you will get fast, cheap, crappy research

In many companies with no experience in using market research, the cost of research tends to kill research projects. Alternatively, the scope and research design is so restricted that the research may be a waste of time and money since we won’t get the information needed to guide the business decisions. The challenge is to find a balance between what the business needs and what it is willing to invest to get it. In my experience, this is an issue of the perceived value of research. When the company thinks it is valuable, it will find the money to fund it.

The 6 Ws

When creating a market research design we need to consider the following 6 Ws:

1. Why do we need the research? A reminder of what’s agreed in Step 1 regarding how the research may help solve the business problem can loosen some of the budget constraints. This also helps to focus the research on the business impact.

2. What information is needed? This requires the formulation of a concrete analytical plan based on what’s agreed on in Step 2. This requires to:

  • Determine what type of data is needed and expected.
  • Select analysis techniques that help reach the research objectives and provide insights that stakeholders are expecting. Here are some examples:
    1. How should we price a new product before it goes to market? Conjoint Analysis may be a good fit. Check: Conjoint Analysis And Realism In Price Research
    2. Which product name elicits the highest purchase intent from a list of 30? Consider MaxDiff. Check: Making the Case for MaxDiff
    3. Where are new market opportunities for our products and services? Segmentation research will find segments with the highest potential. Check: Segmentation is Key to Success.
  • Consider the implications for the research design regarding sample design.

3. Who is the target population/segment of interest? Sample definition helps decide on what data collection method we may use. More than one method may be needed. To read more about mixed-mode data collection check: Mixed Data Collection Modes – Round-Up.

It is important to discuss the sample definition with stakeholders and ask them:

  • Who should we gather data from? Customers? Non-Customers? Category users?
  • What screening criteria should we use to include or exclude different groups in the research and how do they align with the research objectives?
  • What are the caveats and limitations of the sample definition and how they will affect the results and decision-making?
  • What sample size do we need to meet our research objectives that also meet your tolerance for risk and budget goals? Check Sample Size Matter. A large sample doesn’t guarantee representativeness. Check: Does A Large Sample Size Guarantee A Representative Sample?
  • Can we reach the target population with the current budget allocated to the research project?

4. When should we collect the information? Depending on what’s being study we may need to collect data before, during, or after a particular event or behavior. We also need to decide on the measurement frequency (once, regular intervals).

5. Where should we collect the information? Access to research participants and study objectives will inform whether we need to reach them in natural (e.g. home, work, public space, store, etc.) or in controlled environments (e.g. labs, focus group facilities, etc.).

6. In what Way should we collect the information? We use many different data collection methods in market research. Each has advantages and disadvantages. Objectives, sample, the analytical plan, and cost have the highest influence on which methods we use.  Here are some guidelines to select data collection methods:

  • Be open to using hybrid approaches combining qualitative and quantitative data collection methods.
  • Ideally, do qualitative research before or after quantitative research.
  • Consider qualitative research for exploration before quantitative and deep-diving after quantitative research.
  • Consider quantitative research if a go/no-go decision will be made. DO NOT make these types of decisions based only on qualitative research.
  • Discuss which methods are the best fit to research the target population. Some target groups may be difficult to reach with the same method.
  • If you decide on mixed-mode surveys, be aware of potential measurement errors each data collection mode introduces. Check: Understanding the Pros and Cons of Mixed-Mode Research
  • Once the data collection methods are selected, determine if you can do it with internal resources or need a research vendor.
  • If time, staff, or lack of tools are limitations, consider outsourcing the project to an external research vendor. For more on this check: When Do You Need A Market Research Vendor?
  • If you have access to a customer database with emails, use it for studies related to customer retention goals and new product development at first. Don’t forget to also test new product ideas with non-customers.
  • For research supporting customer acquisition efforts, use samples of non-customers in the category.
  • If the study is online get bids from multiple online panels.
  • Don’t buy third-party email lists and blast them with survey invites. It is illegal (SPAM-CAN Act).
  • If you are doing surveys, put time into survey design. Pre-test your surveys before committing to a final version. Do cognitive interviews to test your questions, if possible. To create surveys that gather quality data check: 10 Things to Consider in Survey Design
  • Considering focus groups? Check if it makes sense to use them. Check When Using Focus Groups Makes Sense
  • If you are doing focus groups, avoid common mistakes. To know which they are, check: Common Mistakes When Doing Focus Groups
  • Don’t forget about online qualitative research techniques. Check: Online Qualitative Research Techniques Review

Step 4. Collect Data

Data collection in primary market research is usually based on and survey methodology applied to qualitative and quantitative methods and observational methods.

Data collection modes based on survey methodology, which uses questionnaires (structured) and interviews (unstructured) to gather information about behaviors, attitudes, and opinions include:

  • In-person interviews (in-home, mall-intercepts, focus groups, computer-assisted personal interviews).
  • Phone interviews (with and without interviewers (IVR), with and without video, qualitative or structured surveys).
  • Mail surveys (via traditional mail or through mail panel surveys with re-recruited households).
  • Online surveys (via emails to customer lists or third-party online panels with pre-recruited participants, web-intercepts). Note that unmoderated, remote usability tests use the online survey technology to capture data with task-based questions.

If you are doing surveys (phone or online), I recommend doing a soft launch with a small sample to catch any potential problems related to programming and survey design with real participants.

You also need to monitor the fieldwork at all times, regardless of data collection mode. Additional staff and resources are needed especially for in-person and phone interviews for recruitment and actual data collection.

Observational data collection methods, which collect data about behavioral patterns of people, objects, and events in a systematic way without questioning the people being observed include:

  • In-person observation (ethnography).
  • Digital ethnography.
  • Digital transaction/behavior tracking (e.g., sales tracking, web traffic tracking, A/B testing).
  • Biometric measurement
  • Audit and inventory analysis.
  • Content analysis.
  • Trace analysis from past behaviors.

Step 5. Prepare Data & Analyze

Data preparation may include data entry (mail surveys), data inspection and cleaning (e.g., checking the data for missing data points, inconsistent answers), variable labeling, variable recoding in aggregate categories, coding of open-ended questions, transcription (qualitative research),  weighting to achieve representation, among other things.

In quantitative research using surveys, we usually create cross-tabulated tables with testing to find statistically significant differences by data cuts of interest to assist in the analysis.

In more advanced analytic plans, we use multivariate statistical procedures to find the answers to the questions specified in the research design.

The approach to the analysis of qualitative research data varies by practitioner. At Relevant Insights, we use a systematic approach combining text analytics tools and human experts to analyze data from market research or UX research to get the most insights  out of the data.

Step 6. Report & Socialize Insights for Business Impact

The deliverables of a research project can take many forms nowadays depending on how stakeholders like to consume information. This may include a detailed report, a summary top-line report with key findings, a dashboard with key metrics, or just tables.

Regardless of how the keyholders want to see the results, we recommend:

  • Keeping the key objectives in mind to connect market research to business impact. Check: How To Connect Market Research To Business Impact
  • Sharing preliminary results with key stakeholders. Check if they make sense from a practical standpoint.
  • Focusing on the story behind the numbers and how it supports your recommendations. Don’t do a data dump. Focus on insights.
  • Documenting the conducted research for future reference. The body of the report should include the major findings, insights, and recommendations. The detailed findings, a description of the approach, the research design, the data collection method (s) used, the data analysis procedures adopted may be included in the main body of the report or in the appendix. 

In Short

The research process we follow to support business decisions related to product development, branding, the user or customer experience, and other aspects of marketing can be an involved process in order to ensure quality data and avoid biased insights. This process requires a systematic approach to problem definition in the context of business problems and knowledge and experience in the use of different methodologies to find the solutions to those problems.